In the 17th century hats were an important item of clothing and denoted an individual's social status and occupation. They were extremely valuable and might be passed on from father to son. Hats were made of fur felt, and the best quality felt was made from beaver. The fur of the beaver had little barbs on the end which, when pressed, would interlock and make a solid fabric. This process was called "felting". The felt was then taken and formed into a hat.

During the reign of King Charles I of England (1625 - 1642) the fashion in Europe was for dashing beaver hats trimmed in Ostrich feathers. But by this time the beaver was virtually extinct in Europe. Fortunately, North America, covered as it was by vast forests and subjected much of the year to cold temperatures, provided an alternate source of supply. And so the fur trade was born. The huge demand for hats in the 18th and early 19th century caused the fur trade to boom. Hudson's Bay Company was created to explore and develop new lands in the ongoing search for this most precious raw material. In fact, in its earliest days, the Company promoted itself by presenting complimentary beaver hats (total cost £34) to important men in London to encourage their investment.

Originally centred in France, the European hat-making industry was to a great degree the preserve of Huguenots (French Protestants). But when the Edict of Nantes (1598), which had allowed them the freedom to practise their religion, was revoked in 1685, over 10,000 hatters emigrated to England. France's hat-making industry collapsed while England became the centre of production.

Beaver hats were water-repellent. This fact, coupled with the fact that many hats had wide brims, may help explain their popularity in a rainy climate prior to the invention of the umbrella. Superstitions surrounding beaver fur may also have contributed to its popularity. It was said that wearing a beaver hat made you smarter. It was believed that by rubbing the oil into your hair you would develop a remarkable memory. It was also rumoured that a deaf person would regain their hearing by wearing a beaver hat.

Beaver felt declined in the mid-nineteenth century when silk velour was found to be less expensive yet just as stylish. Prince Albert, consort to Queen Victoria, popularized the wearing of silk hats in the 1840s.